How the credit crunch transformed the UK housing market - The Global Financial Crisis - Savills

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How the credit crunch transformed the UK housing market - The Global Financial Crisis - Savills
Savills Research
                                          UK Residential
                                  savills.com/research

Spotlight

The Global Financial Crisis

     How the credit crunch transformed
          the UK housing market
How the credit crunch transformed the UK housing market - The Global Financial Crisis - Savills
How the credit crunch transformed the UK housing market - The Global Financial Crisis - Savills
FOREWORD

Credit. Crunched
The effects of the Global Financial Crisis, which began in 2007, are still being felt
a decade later, and will continue to influence the housing market in the years ahead

        The first of March this year marked the 10th         markets. For a long time, it looked as if London was
        anniversary of my career switch to a housing         dislocated from the rest of the country, but now it
market analyst. Back then, the housing market was            appears to be hitting up against the borrowing
roaring, but within six months of my arrival it had          constraints imposed through mortgage regulation.
been turned on its head as prices and transactions             What of the future? The longer-term impacts of
went into reverse. Fortunately, these two things were        the GFC are likely to be masked in the short term
not connected. There were much bigger forces at play,        by the effects of political (and associated economic)
forces which continue to shape the market today.             uncertainty. House price growth is slowing and lead
   For many, the first-hand experience of the once-in-a-     indicators suggest that market activity will weaken.
generation events of 2007 and 2008 will be etched into       During the next two years, sentiment looks set to be
their memory. For twenty-somethings – who’ll be more         the main determinant of the market. However,
reliant on the 2015 film The Big Short to understand the
cause and impact of subprime lending – the legacy of
these events will nonetheless be all too real.
   As we discuss in our lead article (p4), what has since
                                                             The Global Financial Crisis
been named the Global Financial Crisis (GFC) has
fundamentally changed the nature of the UK housing
                                                             has fundamentally changed
market. It’s made getting on the housing ladder heavily      the UK housing market
dependent on the Bank of Mum and Dad or Help to
Buy, has meant homeowners trade up the housing
market less often and has placed much greater                as the uncertainty gradually starts to clear, we can be
demands on the private rented sector.                        sure that the fundamentals will come back into play.
   It has also meant that in just over 10 years, I’ve seen      The events of 2007 were the catalyst for the ultra-low
virtually every aspect of a housing market cycle. First,     interest rates which have persisted for a period few
I witnessed unsustainable house price growth which           would have predicted when I was new to the joys of
preceded a rapid market correction. This was                 London commuting. When interest rates rise, we’ll see
followed by a temporary bounce-back in values. Not           another side to the measures put in place to prevent
long after came a second slip in prices as the realities     a repeat of the GFC events. Stress-testing of mortgage
of the changed availability of mortgage debt and the         affordability will take on a different dimension, acting
impact of austerity kicked in. Then came a more              as a more noticeable drag on UK house price growth.
sustained housing market recovery that led to                   You can bet that the events of the last decade
measures aimed at cooling parts of the market                will still impact the housing market in the next.
through mortgage regulation and taxation.
   During the decade, there’s also been a wide variation     Lucian Cook UK Residential
in the performance of regional and local housing             020 7016 3837 lcook@savills.com

                                                                   The Global Financial Crisis timeline

                                                                     August 2007
                                                                     BNP Paribas refers to a ‘complete evaporation
                                                                     of liquidity’, preventing investors from removing
                                                                     money from three of its funds

                                                                                                                 September 2007
                                                                                                                 Investors withdraw
                                                                                                                 more than £1 billion
                                                                                                                 from Northern Rock
                                                                                                                 in just one day

                                                                                                                     savills.co.uk/research 3
How the credit crunch transformed the UK housing market - The Global Financial Crisis - Savills
FEELING THE EFFECTS

Side effects: four
ways the GFC
continues to impact
the housing market
F
       or the UK property market, the short-term effects of the Global          Average house price
       Financial Crisis (GFC) were dramatic and swift. The average UK
       house price fell by 20% in 16 months. Transaction levels, which had
                                                                                UK
averaged 1.65 million a year in the previous 10 years, fell to 730,000 in the   2007: £181,180
12 months to the end of June 2009.
   Ten years on, the crisis and its consequences have dramatically changed      2017: £209,971
the property landscape. It was not until May 2014, for example, that the        London
average UK house price recovered to its pre-credit crunch level, while
transactions have only once risen above 1.3 million.                            2007: £292,409
   And, as we explore here, those events continue to have four significant      2017: £478,142
impacts on the market and will shape it for many years to come.                 Source Nationwide

                                                                                % of lending at

1     There’s been a dramatic slump
      in spending and transactions
                                                                                over 90% LTV
                                                                                2007: 14.1%
                                                                                2017: 3.9%
In the year to the end of March 2017, the total spend on house purchases        Source PRA/FCA
was £312 billion. Given persistently reduced transaction levels and changes
in how they are made up, this is £30 billion less than was seen 10 years ago.
   The amount funded by debt has fallen by even more, some £47 billion
                                                                                Interest-only lending as
(see graphic, facing page). Now, debt accounts for just 43% of house purchase   a % of the whole market
funding, with cash and accumulated equity the dominant source of funding.
   This largely reflects the mortgage regulation measures that were
                                                                                2007: 32.5%
introduced because of the credit crunch with the aim of preventing              2017: 1.2%
another debt-driven housing market boom.                                        Source CML

June 2008                                                                       October 2008
The UK enters its                                                               Three Icelandic banks collapse.
deepest post-war recession.                                                     The UK Government announces
It lasts for five quarters                                                      a £50 billion rescue package for
                                                                                the UK banking industry

                                 September 2008                                               February 2009
                                 Fannie Mae and Freddie                                       Average UK house prices bottom
                                 Mac bailed out by the US                                     out, having fallen by 19.6% in
                                 Government. Lehman Brothers                                  just 16 months according to the
                                 files for bankruptcy                                         Nationwide House Price Index

4 savills.co.uk/research
How the credit crunch transformed the UK housing market - The Global Financial Crisis - Savills
FEELING THE EFFECTS

Debt and equity The source of funds for house purchase and the
change over the last decade (10 years to March 2017)

        First-time                               First-time
       buyer debt                              buyer equity
        £54.3bn                                  £10.2bn
       +10% over                                +85% over
        10 years             Home-               10 years        Outright
                           mover debt                             cash
                            £70.6bn                             £138.4bn
                           -37% over                            +26% over
                            10 years                             10 years
       Buy-to-let                            Home-mover
          debt                                  equity                                   Average first-time
        £10.1bn
       -51% over
                                               £27.2bn
                                              -36% over                                  buyer deposit
        10 years                               10 years          Buy-to-let
                                                                   equity
                                                                                         UK
                                                                   £1.9bn
                                                                 -17% over
                                                                                         2007: £12,556
                     Debt accounts for   Equity accounts
                                                                  10 years               2017: £26,224
                       43% of funding    for 57% of funding
                                                                                         London
                                                                                         2007: £21,196
Source Savills Research using CML and HMRC

                                                                                         2017: £97,513
                                                                                         Source CML

2      The Bank of Mum and Dad has
       become a major player in lending
                                                                                         Average first-time
                                                                                         buyer income
With limits on the amount people can borrow, the high deposit required                   UK
by a first-time buyer presents a significant barrier to younger households
buying their first home.
                                                                                         2007: £34,200
  That said, the amount of equity put down by first-time buyers exceeded                 2017: £40,002
£10 billion in the year to the end of March 2017, an 85% increase on
10 years ago. A lot of that, some £4.2 billion in England alone, is provided
                                                                                         London
by the Bank of Mum and Dad or Help to Buy. Parental funding and                          2007: £51,681
government support are now heavily relied upon to help younger
generations to get on the housing ladder. It is unlikely to change.
                                                                                         2017: £64,263
                                                                                         Source CML
  Occasionally, we read about the return of the 95% or 100% mortgage.
However, gross mortgage lending at loan to values above 90% is still less
than one-fifth of the £52 billion it was in 2007. Now, it represents less than           UK housing transactions
5% of mortgage lending.
  A further consequence of this has been continued growth in the private
                                                                                         Total in 2007: 1.7m
rented sector. More people, across an increasingly wide social spectrum,                 Total in 2017: 1.2m
are renting for longer. The demands on that sector will continue to evolve.              Source HMRC

                            March 2009                                June 2009
                            Bank base rate                            Annual housing transactions
                            is cut for the                            fall to 730,450 – dropping
                            third month in a                          58% from their August
                            row to just 0.5%                          2007 level

                                   April 2009                                                           September 2009
                                   The G20 agrees a global                                              The UK economy
                                   stimulus package of $5 trillion.                                     returns to growth in
                                   It equates to almost 70% of                                          the third quarter
                                   the total value of UK housing

                                                                                                                  savills.co.uk/research 5
How the credit crunch transformed the UK housing market - The Global Financial Crisis - Savills
FEELING THE EFFECTS

                                                       3      There are now fewer rungs
                                                              on the housing ladder
                                                       The debt taken on by home movers, which exceeded £112 billion
Average mortgage                                       10 years ago, now stands at just £70 billion, a 37% decrease. This reflects
for home movers                                        a situation where people are trading up the housing ladder less frequently.
                                                          Compared to the preceding decade, when households could
UK                                                     aggressively trade up the housing ladder, there have been 3.8 million
2007: £130,699                                         fewer such moves by those needing a mortgage in the past 10 years. Any
                                                       recovery in these numbers has been muted, suggesting this is likely to
2017: £174,999                                         become a permanent feature of the market.
London                                                    Long gone are the days where an interest-only mortgage would facilitate
                                                       a move to a bigger, better property. Interest-only mortgages – which
2007: £208,699                                         accounted for one-third of all new loans in 2007 – now represent just
                                                       1.2% of all lending to home owners.
2017: £345,399                                            Not only must home movers factor in the cost of capital repayments
Source CML
                                                       when they consider the affordability of making their next move, they also
                                                       need to have paid off more of their existing mortgage debt and spent longer
Existing mortgaged                                     accumulating equity in their current home.
home owners
moving house
2007: 1 in 15
2017: 1 in 27
Source CML
                                                       4     Buy-to-let mortgages have been
                                                             squeezed back to 2007 levels
                                                       The army of small buy-to-let investors are now also within the scope of
Average mortgage                                       mortgage regulation. Portfolio landlords will follow shortly. This has come
                                                       on the back of more politically motivated increases in stamp duty charges
rate for new lending                                   and restrictions of tax relief on interest payments.
2007: 5.52%                                               Some thought that the combined effect of these measures would result
                                                       in an exodus from the sector, with landlords cashing in. Instead, it has
2017: 2.07%                                            curtailed buying activity of those needing a mortgage to fund their next
Source Bank of England                                 (or first) investment.
                                                          In the year to March 2016, buy-to-let lending was effectively back to
Average mortgage                                       where it was in 2007. Now it is at half those levels. This effect is likely to
                                                       become even more entrenched as the progressive reduction in tax relief
interest as % of income                                combines with rising interest rates to squeeze affordability.
2007: 16.8%                                               Much like the rest of the market, cash has become king. With the Bank
                                                       of England recently acting to ensure that mortgage regulation will be
2017: 7.4%                                             consistently applied by all lenders, across all aspects of the market, that
Source CML                                             is likely to be the lasting legacy of the credit crunch.

                                April 2010                                                    June 2010
                                UK house price growth exceeds                                 Prices in prime central
                                10% according to Nationwide, as the                           London return to their
                                market temporarily bounces back.                              pre-GFC peak, having
                                Greek debt is downgraded to junk                              risen 25% in a year

 December 2009                                                                             May 2010
 The average first-time buyer deposit                                                      A Conservative-Liberal
 peaks at more than £35,000 according                                                      Democrat coalition is
 to the CML, £22,000 more than in August                                                   formed following the
 2007 and £11,000 more than today                                                          2010 general election

6 savills.co.uk/research
How the credit crunch transformed the UK housing market - The Global Financial Crisis - Savills
VALUE, DEBT & EQUIT Y

                                                             House price growth 10 years to March 2017

House price
                                                                                                                                  Below -10%
                                                                                                                                  -10% to 0%
                                                                                                                                  0% to 10%

growth: a
                                                                                                                                  10% to 20%
                                                                                                                                  20% to 30%
                                                                                                                                  30% to 50%

dividing
                                                                                                                                  Over 50%

decade
House prices have risen in most UK regions
during the last decade, but a closer look
at the figures reveals wide divisions

A
          ccording to the Nationwide, the average UK
          house price is only 18% above where it was
          10 years ago. On an inflation-adjusted basis,
the effect of the Global Financial Crisis means the
average UK house price is 11% below its 2007 level.
   This has occurred despite a prolonged period of
abnormally low interest rates. In August 2007, the
average interest rate for a new mortgage was 5.88%.
Now, it stands at just 2.04%.
   Of course, house price averages are misleading.
The Savills Repeat Sales Index uses price-paid data
from the Land Registry and Registers of Scotland.
Across the country as a whole, it broadly concurs
with the Nationwide figures. But it also shows
wide regional and local variations in the nominal
(non-inflation-adjusted) levels of house price
growth reported below.
   It suggests that prices in London have risen by
78% on average in the past 10 years. In the North
East, though, they have fallen by 9%. The extremes
are prices in Hackney, which have risen more than
120%, and Hartlepool, which have fallen by 24%.
There is a north-south divide, but the picture is far
                                                             Source Savills Research using HM Land Registry and Registers of Scotland
more nuanced than that.

                         July 2012                                                      September 2013
                         London hosts the Olympic Games. Mainstream                     Annual housing transactions exceed one
                         house prices in the capital have recovered to                  million for the first time since October
                         within 1.4% of their 2007 peak, though annual                  2008. That’s still well below the 10-year
                         house price growth in the capital slows to 1.1%                pre-crunch average of 1.65 million

January 2011                                March 2013                                                       March 2014
Annual UK house price                       George Osborne launches Help to Buy in                           The Help to
growth slips back into                      the budget. It provides for equity loans to                      Buy equity
negative territory according                buyers of new build property and mortgage                        loan scheme is
to the Nationwide                           guarantees for higher loan-to-value lending                      extended to 2020

                                                                                                                               savills.co.uk/research 7
VALUE, DEBT & EQUIT Y

London as an island
                                                               A focus on the future
Price growth in London has far outstripped areas               Short term The market is likely to be largely driven by sentiment
beyond the M25. Over 10 years, London price growth             with price growth suppressed by political and economic uncertainty.
has essentially been twice that of the South East.             London is expected to be most exposed, given the sheer scale of the
   Consequently, London buyers appear to be hitting            financial commitment which a mortgaged house purchase now
against the limits of mortgage regulation, with fewer          represents in the capital.
buyers confined to more affluent households,                   Longer term The cost of mortgage debt will be key even though
stretching their borrowing to more than four times             the UK housing market has become increasingly driven by equity.
their household income and buying in areas they                   When rates rise, we expect a squeeze on affordability. Stress
would not have considered pre-Global Financial Crisis.         testing of household finances is expected to act as a drag on growth.
   Some urban markets such as Oxford, Cambridge                   Recent evidence gives us clues as to the geographical distribution
and Brighton have parallels with London, both in               of that price growth. Those on the first rungs of the housing ladder
terms of the price growth and the affordability                are likely to want to stretch their money further, particularly in
issues they now face.                                          London and increasingly across the south of the country. In many
   In addition to the usual suspects such as St Albans         cases, that will push them into the ‘next-most-desirable’ markets,
and Elmbridge, which have always attracted a flow              that are more affordable and accessible than their first choice.
of equity out of the capital, we have also seen prices            Equity generated in the London housing market among older
in lower-value commuter towns such as Slough,                  households is likely to continue to be exported into the commuter
Stevenage and Harlow rise 50% in the past decade,              zone. Across other parts of the country, we expect the legacy of the
as investors and homeowners have looked to stretch             credit crunch to favour more valuable equity-rich markets, with
their mortgage further.                                        lower-value areas dependent on the strength of the local economy.
   But the gap between London and its hinterland
has widened considerably and has only recently
shown any sign of narrowing.

The gap between debt and equity
Moving away from London, the difference between            10-year house price growth to March 2017
equity-rich and more mortgage-dependent markets
has been noticeable.                                                               -9%
                                                             North East
   In Bristol and Bath, 10-year price growth of 48%
and 41% respectively has not just been stronger than        North West                    1%
the average for the South West, but also the South East,                                  2%
                                                            Yorks/Hum
while markets such as Gloucester and Great Yarmouth
                                                                                            3%
have prices that are no more than 15% higher than                  Wales
they were in 2007.                                           West Mids                    11%
   In the Midlands and the North, markets such as
                                                                 Scotland                   14%
Trafford, Rushcliffe and York are poles apart from
Blackpool, Blackburn and Burnley in relative terms,           East Mids                     14%
but here the differences are between a price growth                                              20%
of 20 and 30% for the former and net falls of 10 to         South West
20% for the latter.                                                  East                                  39%
   North of the border, price growth of 28% in                                                              40%
Edinburgh has been twice that of Scotland as a whole.        South East
Fuelled by its local economy, Aberdeen had price                  London
                                                                                                                                      78%
growth of 44% between March 2007 and March 2015,
                                                                        -20%           0%          20%           40%          60%           80%
but prices have fallen 9% since then with the oil price,
so growth over the 10 years has been 35%.                  Source Savills Research using HM Land Registry and Registers of Scotland

April 2014                                                             December 2014
Mortgage Market Review brings in new lending                           Stamp Duty Land Tax is overhauled
regulations for home buyers. They include stress                       by removing the unpopular slab
testing of affordability, as house price growth again                  structure and reducing the liability
moves back into double-digit territory                                 for 98% of the market

                                     June 2014                                                                           May 2015
                                     Annual house price growth                                                           The Conservative
                                     across London stands                                                                party secures an
                                     at 25.8% according to                                                               outright majority at
                                     the Nationwide                                                                      the general election

8 savills.co.uk/research
MAINSTREAM SUMMARY

    Approach with caution
    As the effects of the Global Financial Crisis evolve, political and economic
    uncertainty has created a greater sense of caution in the UK housing market

   A
             lthough this report chiefly focuses on the                                                                                                                                                         been compounded by a slight squeeze on household
             long-term impact of the Global Financial                                                                                                                                                           finances, as inflation outstrips wage growth, and the
             Crisis, recent economic and political                                                                                                                                                              increased tax burden faced by buy-to-let investors.
    uncertainty has contributed to a noticeable slowdown                                                                                                                                                           The unexpected result of the general election,
    in rates of house price growth across the mainstream                                                                                                                                                        which has resulted in a hung parliament just as Brexit
    UK housing market.                                                                                                                                                                                          negotiations commence, means there is little to
       According to the Nationwide Index, annual house                                                                                                                                                          suggest this picture will change in the short term.
    price growth had fallen to just 3.1% by June 2017,                                                                                                                                                             Indications of an interest rate rise in the next six
    from 5.1% a year earlier. Similarly, Halifax put it                                                                                                                                                         to 12 months will only add to this caution. However,
    at 2.6%, down from 8.4% in June 2016.                                                                                                                                                                       underlying affordability of existing mortgage debt
       The RICS Housing Market Survey suggests that                                                                                                                                                             is unlikely to become an issue, so we expect price
    numbers of both new buyer enquiries and properties                                                                                                                                                          growth to continue to slow rather than go into reverse.
    being brought to the market are contracting as buyers                                                                                                                                                          All of this suggests that we will return to more of
    and sellers become more cautious. That feeling has                                                                                                                                                          a needs based market during the next two years.

    Mainstream house price growth (year to June)
    UK 2016: 5.1% 2017: 3.1% London 2016: 10.0% 2017: 1.3%
    Source Nationwide

    Market caution Annual UK house price growth, new buyer enquiries and instructions
                                                                                                                                           Annual	
  House	
  Price	
  Growth	
                                              New	
  Buyer	
  Enquiries	
                                        New	
  Instruc9ons	
  
                                                                                                                                                    Annual house price                                             New buyer enquiries                                                New instructions

                                                                     15%!                                                                                                                                                                                                                                                                                                                          60!

                                                                     10%!                                                                                                                                                                                                                                                                                                                          40!
                            Annual	
  House	
  price	
  Growth	
  

                                                                                                                                                                                                                                                                                                                                                                                                          Balance	
  of	
  Opinion	
  
                                                                      5%!                                                                                                                                                                                                                                                                                                                          20!
Annual house price growth

                                                                      0%!                                                                                                                                                                                                                                                                                                                          0!

                                                                                                                                                                                                                                                                                                                                                                                                                                         Balance of opinion
                                                                      -5%!                                                                                                                                                                                                                                                                                                                         -20!

                                                                     -10%!                                                                                                                                                                                                                                                                                                                         -40!

                                                                     -15%!                                                                                                                                                                                                                                                                                                                         -60!

                                                                     -20%!                                                                                                                                                                                                                                                                                                                         -80!
                                                                             Jun-07!
                                                                                       Oct-07!
                                                                                                 Feb-08!
                                                                                                           Jun-08!
                                                                                                                     Oct-08!
                                                                                                                               Feb-09!
                                                                                                                                         Jun-09!
                                                                                                                                                   Oct-09!
                                                                                                                                                             Feb-10!
                                                                                                                                                                       Jun-10!
                                                                                                                                                                                 Oct-10!
                                                                                                                                                                                           Feb-11!
                                                                                                                                                                                                     Jun-11!
                                                                                                                                                                                                               Oct-11!
                                                                                                                                                                                                                         Feb-12!
                                                                                                                                                                                                                                   Jun-12!
                                                                                                                                                                                                                                             Oct-12!
                                                                                                                                                                                                                                                       Feb-13!
                                                                                                                                                                                                                                                                 Jun-13!
                                                                                                                                                                                                                                                                           Oct-13!

                                                                                                                                                                                                                                                                                                                   Feb-15!
                                                                                                                                                                                                                                                                                                                             Jun-15!
                                                                                                                                                                                                                                                                                                                                       Oct-15!

                                                                                                                                                                                                                                                                                                                                                                               Feb-17!
                                                                                                                                                                                                                                                                                                                                                                                         Jun-17!
                                                                                                                                                                                                                                                                                               Jun-14!
                                                                                                                                                                                                                                                                                                         Oct-14!

                                                                                                                                                                                                                                                                                                                                                           Jun-16!
                                                                                                                                                                                                                                                                                                                                                                     Oct-16!
                                                                                                                                                                                                                                                                                     Feb-14!

                                                                                                                                                                                                                                                                                                                                                 Feb-16!

    Source RICS and Nationwide

             August 2015                                                                                                                                                                                                                                                                                                       June 2016
             Annual UK house price                                                                                                                                                                                                                                                                                             Britain votes to
             growth falls back to 3.2%                                                                                                                                                                                                                                                                                         leave the EU
             as mortgage regulation
             cools the market

                                                                                                                                              March 2016                                                                                                                                                                      August 2016
                                                                                                                                              Annual housing transactions reach a post-                                                                                                                                       UK bank base
                                                                                                                                              downturn peak of just over 1.3 million, boosted                                                                                                                                 rate is cut to
                                                                                                                                              by a rush of investors seeking to avoid the 3%                                                                                                                                  0.25%
                                                                                                                                              additional homes stamp duty surcharge

                                                                                                                                                                                                                                                                                                                                                                 savills.co.uk/research 9
PRIME SUMMARY

Finding balance
Following a period of price adjustment and uncertainty in prime
central London, values are starting to find a more balanced level

S
       ubdued buyer confidence in the mainstream               Outside the capital, the effect of taxation has been
       housing market (see p9) has been compounded by       less significant. Here, the incidence of stamp duty
       high stamp duty costs at the top end. This is most   is less acute and there was also weaker growth in
evident in London, where prices peaked in September         the run up to the tax changes of two and half years
2014 and have fallen by an average of 6.9% since.           ago. Still, annual price growth only averages 0.9%.
   In the prime central London market, the weakness            The increased popularity in prime urban property
of sterling has been offset by greater exposure to          throughout and beyond the London commuter zone
capital gains tax and inheritance tax for overseas          means the price gap to prime rural homes remains
buyers. Price adjustment has been greater and, with         wide. Consequently, farmhouses, rectories and manor
values having fallen by more than 14% in this area,         houses all look good value.
they are now back at December 2011 levels.                     Across the prime market, sellers are increasingly
   From March to June 2017, prices slipped by 1.3%.         aware of the need to match asking prices with buyer
Although not significant, it is reflective of the price-    expectation. So, even with a thinner seam of demand,
sensitive nature of demand that has become the norm.        the right property at the right price continues to sell.

Role reversal Prime house price movements in other regions of the
UK have recently been outperforming London and its suburbs

                                              Quarterly                 Annual                Since Sept 2014

    Central London                              -1.3%                   -6.8%                      -14.1%

    Other London                                -0.7%                    -4.7%                      -3.4%

    Suburbs                                     -0.3%                   -0.9%                       0.7%

    Inner commute                               -0.4%                   -0.5%                      3.3%

    Outer commute                               -0.6%                    1.0%                       6.3%

    Remainder of South                          0.5%                    2.3%                        7.5%

    Midlands and North                          0.4%                     1.9%                       3.4%

    Scotland                                    0.2%                    1.1%                       1.5%

Source Savills prime indices, Q2 2017

                        January 2017                                               June 2017
                        Tighter mortgage                                           The Conservative party fails to win an outright
                        regulation is                                              majority in a snap general election. Annual UK
                        introduced for the                                         house price growth stands at 3.1% according to
                        buy-to-let sector                                          Nationwide, while growth in London slows to 1.3%

 September 2016                                             March 2017
 Government announces that                                  The UK government
 the mortgage guarantee                                     triggers article 50
 element of Help to Buy will
 not be extended for 2017

10 savills.co.uk/research
Lucian Cook                    Jim Ward                        Chris Buckle                    Katy Warrick                    Jacqui Daly                     Faisal Choudhry
Head of UK                     Director                        Director                        Head of London                  Director                        Director of Scottish
Residential Research           Residential Research            Residential Research            Residential Research            Residential Research            Residential Research
020 7016 3837                  020 7409 8841                   020 7016 3881                   020 7016 3884                   020 7016 3779                   01412 225880
lcook@savills.com              jward@savills.com               cbuckle@savills.com             kwarrick@savills.com            jdaly@savills.com               fchoudhry@savills.com

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report is for general informative purposes only. It may not be published, reproduced or quoted, in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement
or other document without prior consent. While every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from
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